Florida Real Estate Tax Reform - Round Two

The Florida Legislature passed its replacement property tax reform amendment on Monday. The new measures will go before voters in the form of a ballot referendum on January, 29, 2008, and will require 60% approval in order to become law. The reform tax package is expected to save taxpayers $12.5 billion in the first five years.

Highlights of the new tax reform package include:

• Doubles the $25K homestead exemption to $50K on all homes valued over $75,000. The additional $25K exemption does not affect school taxes.
• Allows owners of homesteaded property to transfer ("portability") up to $500,000 in Save Our Homes benefits, including school taxes, to a new home.
• The proposal, if passed, will be retroactive to January 1, 2007.
• Imposes a 10% per year assessment cap on non-homestead property (commercial properties, second/vacation homes and rentals) excluding school taxes for the next 10
• years. After 10 years, voters will have the option to extend the 10% cap.
• Allows businesses to exempt $25,000 in taxes paid on computers, office equipment, and other personal property.

While not quite everything the legislature could have done to reform property taxes, the proposal should have some positive effects.  Most importantly, it should help jump-start the sagging real estate market and make it the economic engine Florida desperatly needs right now.  And, legislators on both sides of this issue vowed they are not done with property tax reform and will take up further changes in the next legislative session.

The only concern with the new amendment is that by including a portability provision, without also adding some kind of relief for first-time homebuyers, there could be a basis for another court challenge based on the U.S. Constitution’s “right to travel” provision. If it exists, you can bet someone in the state will pursue the legal action and we once again could be back at square one. Voters will just have to wait and see.

If you would like more information on how this tax reform will impact your personal situation, contact us at Gulf Coast Associates, Realtors® and will be happy to help.

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